Income Tax Appellate Tribunal - Cochin
Kalpaka Transport Co. Ltd. vs Deputy Commissioner Of Income-Tax on 23 May, 2000
Equivalent citations: [2001]77ITD314(COCH)
ORDER
K.P.T. Thangal, Judicial Member.
1. This appeal by the assesses is for the assessment year 1991-92.
2. The first ground of objection is directed against the order of the CIT(A) in rejecting the assessee's claim that interest under section 234A of the Income-tax Act, 1961, ought to have been charged from January, 1992 to June, 1993 (i,e. upto the date of filing the return by the assessee voluntarily) and not for the period from January, 1992 to 5-2-1994 (the date of filing the letter to the effect that the return already filed may be treated as one filed in response to the notice under section 14S).
3. The facts of the case are briefly stated as follows :
The assessee-company filed its return of income on 21-6-1993. Since the return filed was out of time, the same was treated as invalid. Subsequently, notice under section 148 was issued on 17-1-1994 in response to which the assessee requested to adopt the return filed earlier as one filed in response to the notice issued under section 148. However, the Assessing Officer treated the return as one filed subsequent to the issuance of notice under section 148 and processed the same on 9-2-1994. While processing the return, the Assessing Officer charged interest under section 234A for the assessment year under consideration upto February, 1994. The assessee was aggrieved and went in appeal before the learned first appellate authority.
4. The case of the assessee before the CIT(A) was that interest under section 234A should have been charged only for the intervening period of January, 1992 to June, 1993, the date of filing of the original return. The CIT(A) concurred with the finding of the Assessing Officer that the return filed on 21-6-1993 was time-barred and hence invalid. The fact remains, in response to the notice issued under section 148, the assessee by its letter dated 5-2-1994, which was made available in the office of the Assessing Officer on 7-2-1994, requested the Assessing Officer to treat the return belatedly filed on 21-6-1993 as one filed under section 148. In the above circumstance, the CIT(A) concurred with the finding of the Assessing Officer that the valid return should be deemed to have been filed on 7-2-1994 and not on 21-6-1993. Therefore, the CIT(A) held that the return filed on 21-6-1993 was nan est and, hence, interest under section 234A was rightly charged upto February, 1994. While confirming the levy of interest under section 234A, the CIT(A) held that, in fact, the assessee should have filed the return in response to the notice issued under section 148 on 17-1-1994, but the assesses vide his letter dated 5-2-1994, which was filed in the office of the Assessing Officer on 7-2-1994, chose to treat the earlier return filed on 21-6-1993 as one filed in response to the notice issued under section 148. In the circumstances, the C1T(A) held that the Assessing Officer was justified in his view that the return under section 148 was filed only on 7-2-1994. The CIT(A) accordingly upheld the charging of interest upto 7-2-1994. The assessee is aggrieved and is on appeal before the Tribunal.
5. The facts as divulged from the orders of the Revenue authorities are as under: The notice under section 142(1) was issued on 19-8-1992 requiring the assessee to file the return of income by 20-9-1992. The assessee filed the return belated, only on 22-6-1993. A notice was issued to the assessee to furnish the accounts. According to the assessee, the proceedings to make the assessment was still open in the light of the notice issued. The return filed, when the proceedings are still pending, according to the assessee, is a return filed under section 142(1). The fact that the return is described as original or not is immaterial if the obligation to file the return and the circumstances under which it is filed is traceable or relatable to a valid notice issued by the department. It is the case of the assessee that the return filed on 22-6-1993 was filed in response to the notice issued under section 142(1).
6-7. In the light of the above facts, it is the case of the assessee that in the second notice issued on 19-5-1993 the words "true and correct return of your income" are not struck off. So if that is read along with the first notice calling for a return it clearly shows that what is filed is the return under section 142(1) and not an invalid return. The assessee has a case that even in the second notice issued on 19-5-1993 the department had called for a return and that is why the words a "return of your" income is not struck off. So the fact that the return filed after the time limit in the first notice is not a material circumstance.
8. It is also the case of the assessee that under section 234A, a return filed under section 142(1) before assessment proceedings are over will stop the running of interest under that section. Section 234A does not say that a return should be filed within the time limit prescribed in the notice under section 142(1). So if such a return is filed before the assessment, it stops the continuation of default and it is a valid, live and forceful return for the limited purpose of charging of interest. For the purpose of charging interest such return cannot be treated as invalid or non est return. So, the point is, the return filed is under section 142(1) and is a valid return, even if it is filed after the expiry of the time limit stipulated in the notice issued under section 142(1) calling for a return.
9. Opposing the above submissions, the learned departmental representative supported the orders of the Revenue authorities. It is true that a notice under section 142(1) was issued calling on the assessee to file the return by 20-9-1992. The assessee did not file the return by the due date mentioned in the notice. It is also not disputed that the assessee did not file the return under section 139. The time limit to file the return under section 139(4) also expired on 31-3-1993. Notice under section 148 was issued on 17-1-1994 and the assessee wrote to the Assessing Officer to treat the return filed on 22-6-1993 as a return filed under section 148. Therefore, the learned departmental representative submitted the Assessing Officer was justified in reckoning the date of filing the return as 7-2-1994. The assessee did not file the return under section 139 and the return filed beyond the date permitted under section 139 was time-barred and, therefore, the Assessing Officer was justified in treating the return as invalid. The learned departmental representative, therefore, submitted that the order of the CIT(Appeals) confirming the levy of interest under section 234A is to be upheld as the return filed belatedly is a return not existing in the eye of law for all practical purposes.
10. We have heard the rival submissions and gone through the orders of the Revenue authorities. Sections 234A, B and C were inserted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989. The caption of the section is "interest for defaults in furnishing the return of income". Section 234A reads as under :
"234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and-
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under subsection (1) of section 143 or on regular assessment as reduced by the advance-tax, if any, paid and any tax deducted or collected at source.
Explanation 1.--In this section "due date" means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee.
It is not disputed that the assessee has not filed the return of income as stipulated under section 139(1) on or before the due date or under subsection (4) of section 139 within the time allowed under the notice issued by virtue of sub-section (1) of section 142. However, it is the case of the assessee that by virtue of section 234A, interest could be charged only upto the date of filing of the return even if it is filed after the due date as per section 142(1).
11. Considering the rival submissions and going through the section 234A we are of the view that the contention of the learned counsel for the assessee is based on sound reasoning and is liable to be accepted. A reading of section 234A makes it clear that in the case of an assessee who has filed the return, but filed the return after the "due date" stipulated in the notice under section 142, the date reckoning for interest to be charged under this section ends on the date of furnishing the return, in case the return is furnished after the due date. In the instant case, the assessee was called upon to file the return on 20-9-1992 by issuance of a notice on 19-8-1992 under section 142(1). The assessee did not file the return by that date. However, the assessee filed the return on 22-6-1993. For all practical purposes, a return filed under section 142(1) after the due date is invalid and non estin the eye of law. Section 234A(l)(a) stales that, where a return is furnished after the due date, ending on the date of furnishing of the return. It only means, in case an assessee fails to furnish the return by due date, but furnishes the same subsequently, then interest is chargeable only upto the date of filing of that return.
12. A return filed, after the due date, in response to a notice under section 142(1) cannot be ignored while charging interest under section 234A in view of the clear wording of section 234A(l)(a) viz., "where a return is furnished after the due date, ending on the date of furnishing of the return". That means in a case where the belated return has been filed after the issue of the notice under section 142(1), the period for calculation of interest under section 234A ends with the date of furnishing of that return.
13. We see logic and sound reasoning in coming to this conclusion. An assessee defaulted by not filing the return on or before the due date as has been called upon to file the return under section 142(1), but files the return after the due date, but before the completion of the assessment (even under section 144); then for the purpose of charging interest under section 234A, the date on which the return was filed belatedly is the reckoning date. If this is not the position, the date upto which interest is to be changed, is left to the discretion of the Assessing Officer. He may choose, intentionally or unintentionally his own time to issue the notice under section 148. If he chooses to issue notice under section 148 very late date only, then the assessee will become liable to interest under section 234A for a longer period, even if the belated return he had filed earlier. If section 234A(l)(a) is applied correctly, such an eventuality will not arise; the assessee's liability to interest will not depend on the issue of the notice under section 148 by the Assessing Officer, it will rather depend on the date on which the assessee files the return in response to the notice under section 142(1) even if it is a belated return. Legislature in its wisdom thought the period upto which interest is to be charged should not be left to the discretion of the Assessing Officer.
14. In view of the above, we hold that the first appellate authority was not justified in confirming the order of the Assessing Officer charging interest under section 234A upto the month of February, 1994. We hold the assessee is liable to pay interest under section 234A only upto the date of filing of the return on 22-6-1993 though it was filed late.
15. [This para is not reproduced here, it involves minor issues.]